Shai Agassi is famously persuasive. With just an idea, he was able to raise $300 million to launch Better Place, a venture that plans to build electric car charging spots and battery switching stations in Israel, Denmark, San Francisco, and many other places.

He was able to convince Carlos Ghosn, the CEO of Renault-Nissan to build electric sedans with a battery pack that can be swapped out at Better Place's robot-assisted stations.

People in the auto industry seemed intrigued with Better Place's business model, where the company owns the batteries and the consumer buys a monthly contract to charge their cars.

But apart from Renault Nissan, no other automakers have signed on with Better Place. And industry executives have voiced skepticism on various aspects of Better Place's ambitious plan: Can one company build an electric vehicle charging infrastructure and operate it profitably? On a technical level, can battery packs be standardized in size for automated battery changing?

Said another way, nobody doubts that Agassi is a visionary with good intentions--to reduce the world's dependence on oil to help preserve the planet. People just wonder if he can make a business of it.

Next month, Better Place will show off a key piece of its technology in Yokohama, Japan: an automated system to switch out batteries. Cars drive up a ramp and a robot quickly removes a battery pack and puts a fresh one in.

During a talk at the Fortune Brainstorm Green conference on Tuesday, Agassi said that the company plans to test its technology components this year, test its charging networks next year, and then have "mass market" roll-out in 2011.

After his presentation, I sat down with Agassi, an Israel-born former SAP software executive, to get a better idea of where Better Place is going.

Question: This is a hugely ambitious project. Do you ever doubt that you're taking on too much?
Agassi: Not at all. Look, engineering is a very interesting discipline. You get into a room, you design, design, design. You write a bunch of white papers and you build a prototype. If you've built a prototype, the next question is can you build at scale and will it last?

If I can take a battery pack in and out of a car 50 times in an hour and the car still drives, then nothing in the design says that there is issue. Then what you got to do is do it a 1000 times, a million times. And then at some point, you can say that engineering-wise, it has been solved. We're at a point today where the engineering questions are at a fourth fifth level--they're not first-order questions. We're debating whether there will be one or two or three spots on the car for charging. We're debating ways to make sure that kids can't pull the plug out when they run around the neighborhood.

Is it done? Absolutely not. Will it take another two years to get done? Yes. Have I done bigger, more complicated projects? I gotta tell you, mySAP Business Suite is more complex. What most people don't realize is we have 300 or 400 engineers working on this. With the BusinessSuite, I had to somehow synchronize 5,000 engineers. Engineering-wise, this is a simpler order problem that I solved before in my life.

OK, but at SAP you were in control of the resources at hand. When you talk about installing switching stations, battery-swapping stations--that's a lot of other variables.
No, it's just hardware.

If there were three companies copying Better Place, your headline for this interview would be "Shai Agassi, the visionary, first operator of electric car." Right now it would say: "Shai Agassi, the outlier. Maybe he's right, maybe he's nuts."

It's people--getting people to agree to install these things, getting money to install them...
Ever see SAP users? In everything you install, there is that variable of the user. In this case, it's actually an easier thing to do because it's a consumer. You know very quickly if you fail.

So what I'm trying to say is, the engineering isn't the problem any more. The second problem is the economics. We've sourced in the car most of the components--Renault Nissan has. So we roughly know what the costs are. I've sourced most of the components of my system so I roughly know the cost... We're not that far from what we thought our costs would be. It's not too complex.

The last thing that remains that nobody knows is scale and the X factor: consumer fear versus consumer green.

Do you mean whether the car will perform well and consumers will get used to plugging their car in every day?
Our car compared to the gasoline version of the same car is twice faster going from 30 (miles per hour) to 50 and from 50 to 70. It's a fast car. We know it's fun.

The second part is, do people plug? I have two electric cars. I have a plug at home, I have a plug at work. There's a world of difference between zero plugs, one plug and two plugs.

The thought, the process of widely distributed network absolutely changes everything. It's the difference between having a mobile device that has edge or doesn't have edge. If you have edge, you're not afraid to walk away from home and worry you forget to do something on your computer.

You raised $200 million and then $100 million to build out the project in Denmark because these things will be financed locally. These are big numbers. Can you keep raising the money you need?
Yeah. A way to think about it is we're the next oil company. We sell miles. Oil companies sell miles. An integrated oil company, at the end of the day, one of its key products is miles. It's not gasoline. If told you I'm an oil company that has a guaranteed supply of oil once I put the distribution infrastructure (in place) at a cost of zero dollars a barrel, how many companies don't want to invest in a company like that?

What do you mean by a zero-dollar barrel?
When I say zero-dollar barrel, I mean if you took out all components (that go into the cost of a barrel of oil) other than the crude oil--refining, tax--what is equivalency of a zero-dollar barrel? It's 90 cents.

We're going to be at 2 cents a mile between 2015 and 2020. At 2 cents a mile, 45 miles per gallon is equivalent to 90 cents, which is equivalent to a zero-dollar barrel.

So what do I get if I sign on with Better Place?
You get miles.

I want a car, though. I don't want miles.
You buy your car. It's the exactly same model as you do now. You go to your dealer, you buy a car.

So imagine in 2012, you go to a dealer that works with us and you buy an electric car. The price is, give or take, $20,000 minus $7,500 government rebate. Luxury would bring you up, less features bring you down but that's roughly the range. The same car you'd see on Sunday afternoon for ball games.

It feels to you like a $12,000 car. Now you have different options for buying miles. You can buy miles on variable price. You can say, every time I go 500 miles, I'll pay the price of the mile at the gas station near me. If it goes up, you pay more. If it goes down, you pay less. So it's the equivalent of a gas tank, which will take you about 400 miles. Every time you drive 400 miles, we'll take a gas tank worth out of your credit card.

If you hate variable rate, and you know that you're going to drive 15,000 miles, then you can prebuy 15,000 miles at a fixed right. If you go above that, you're buying at the variable rate. Or you can have a fixed rate and drive as many miles as you want.

When you say your like a cell phone operator, do you mean you're sort of like the energy provider?
I don't sell the energy--the battery makers do that. I sell the convenience.

Basically what we've understood is that people buy cars and miles. We came in and said we need to provide an integrated experience. I love the convenience of being able to drive and never getting stuck. So gas stations are like that.

And then we need to create some level of standardization that you're not afraid. We needed to give you the safety that somebody is standing behind it, putting the supply chain together, testing all these pieces. That's what an operator is.

And then you make money on these contracts?
There's a margin. I buy batteries and electrons and I sell miles. I buy batteries and electrons wholesale, I sell miles at retail and there is a margin between one and the other.

How does AT&T make money? They bought bandwidth from the government at wholesale. How much did they pay for bandwidth? A ton--billions. How much do you pay for minutes? Nothing. How do you buy something at a ton and sell at nothing? You do it at volume.

How much volume do you need for the whole enterprise to be profitable?
We break even for what we call the initiative infrastructure--feeling like I'm never going to get stuck requires a certain amount of infrastructure. Israel is an example. Before you have 100 switch stations, I have routes where I could drive 25 or 30 miles and not find a switch station. But the minute I put in 100 switch stations across the country, there is no route in the country in which I won't have a stop every 25 miles to switch the batteries.

For charge spots, it's roughly about 100,000 spots across Israel when you get ubiquity. Everywhere I go there will be enough spots, especially with software to direct me, that I'm not inconvenienced that I got into an electric car. So that's the cost of entry for this model.

The question is if that's the cost of entry for a two-million car country, what percentage out of the population do I need to get to break even on that entry? It's one percent--or 20,000 people. You have to keep building up, but from that point on, you're a profitable business.

Here's the interesting thing: we're two and a half years away from the network and we've pre-sold 20,000 subscribers. How do you like that economic model compared to car companies?

The software you've developed can identify cars when they plug into your charge spots and charge the batteries at off-peak times. You appreciate the importance of standards. Isn't that a closed network model?
No, because we stated from the first second two things. We asked any country we come to to put one regulation in place which is that all charge spots will be international standards based.

And all charge networks will be forced to provide open access to all other charge networks at the same price across networks.

Walk me through the level of interoperability.
I have a million spots, somebody else built 1,000 spots. Our spots need to be the same. I can't block you by the fact that I created a patented interface from being able to come into the same market. So we have the same connector and the connector has to be decided by the ISO (International Organization for Standardization), not by me, not by you. So the physical lock is gone.

The second thing is, I can't ask for a vig for my connector. If you think about the iPod interface, Apple is charging a fee to anybody who makes a speaker that can plug into the iPod on the license of the connector.

We say, sorry, even though I'm going to be the largest (network operator) probably in the beginning I don't want to be Apple. I actually believe that would be the worst thing that could happen to adoption in the beginning. Speed is super-critical in this.

I need to be able to walk up to a charge spot from my competitor and have that network basically charge me--the other operator--a fee. And when their customer comes to my network, I need to be able to charge that network. It's like roaming. This is like ATMs across banks with no fees for the customer.

I'm not aware of any other companies that are copying your operator model. Do you think there will be others?
I hope. If there were three companies copying Better Place, your headline for this interview would be "Shai Agassi, the visionary, first operator of electric car." Right now it would say: "Shai Agassi, the outlier. Maybe he's right, maybe he's nuts." Only is worst than first. (Having a competitor) would cut my costs of lobbying because I can't point to someone and say, they're doing it, too.

Who do you think will do it? Automakers, utilities?
That's the quagmire. I didn't write this plan thinking I wanted to start a company. I was thinking I was going to be the head of SAP, but we need somebody to go do this. It was a hypothetical. It wasn't a business plan I wrote. It was a white paper I did in the World Economic Forum.

If we didn't exist, the car guys would have to invent us because they would not build it. They'll hope somebody else somebody else builds. The funny part is that we've invented ourselves out a lack of desire of all parties to do it. And you see them on panels, see them on discussions, they're extremely defensive. Instead of thinking, somebody just opened up a new segment of the market, let me take advantage of it. Carlos Ghosn of Renault Nissan said, somebody took a problem off my hands, let's build volume cars, which is what we know what to do.

So do you think it's just a question of time before some gets into the electric car infrastructure business?
I think a ton of people will do it. I don't believe that there's a market opportunity of this magnitude and I'm the only guy that's going to do it. Now, they'll let us prove it, let us work out the bugs. But at some point, somebody will want to build a network in Akron, Ohio, and we'll be busy in Paris, France. And they'll say, I'll do it and copy your model.

About the author

Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
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